The assessee claimed weighted deduction u/s 35(1)(ii) for ...

Disallowance of donation deduction u/s 35(1)(ii) due to business loss, unapproved trust, and forged certificate.

Case Laws     Income Tax

September 14, 2024

The assessee claimed weighted deduction u/s 35(1)(ii) for donation made to M/s Shri Arvindo Institute of Applied Scientific Research Trust at the end of the year. The Assessing Officer disallowed the deduction, stating that the assessee had business loss and did not carry out any business after selling the factory land. The Tribunal held that the computation of income chargeable under the head "Capital Gain" is governed by Section 48, allowing deductions for expenditure incurred in connection with transfer of capital asset, cost of acquisition, and cost of improvement. Section 48 does not provide for deduction u/s 35(1)(ii). Allowing such deduction would be against the provisions of the Act. The CBDT clarified that the trust was not approved u/s 35(1)(ii) after 31.03.2006 and had raised substantial donations on a "forged certificate." Therefore, the donation made by the assessee to the trust is ineligible for deduction u/s 35(1)(ii). The assessee's appeal was dismissed.

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